TFSA - Questrade - Dividends?

[Kaitlyn]

Say you have a TFSA with Questrade and you invest exactly $5,000 (your limit). What if the stock(s) you invest in pay dividends - where does that money go and how does it affect your TFSA at Questrade?

[Conquistador]

Say you have a TFSA with Questrade and you invest exactly $5,000 (your limit). What if the stock(s) you invest in pay dividends - where does that money go and how does it affect your TFSA at Questrade?

$5K is your contribution limit, not the amount of money that can be in the TFSA. Ideally your TFSA would grow exponentially. That's the point.

The dividend, unless set to be reinvested in more stock of the company, would go into the cash account portion of your TFSA.

[belfour]

Money goes to your trading account. It doesn't affect your TFSA contributions.

[Kaitlyn]

So I assuming it goes into the cash portion, I can:

- Continue buying any stocks I wish that the "spare money" covers?
- Withdraw it to my bank account periodically, if I wish?

[jobby]

yes
yes

[Kaitlyn]

Thanks for the clarification guys

[Efx]

So I assuming it goes into the cash portion, I can:

- Continue buying any stocks I wish that the "spare money" covers?
- Withdraw it to my bank account periodically, if I wish?

Whatever you withdraw can be redeposited on top of the 5k limit in the new year.

[Kaitlyn]

Whatever you withdraw can be redeposited on top of the 5k limit in the new year.

Wait, really?

So Year 1 - Deposit $5k, make $5k in profit - withdraw

Year 2 - Still have original $5k, deposit new $5k limit - and I can ALSO invest the 5k i withdrew in year 1?

[Jor]

Wait, really?

So Year 1 - Deposit $5k, make $5k in profit - withdraw

Year 2 - Still have original $5k, deposit new $5k limit - and I can ALSO invest the 5k i withdrew in year 1?

Yes, that is the beauty of TFSA. Don't forget that you already have a 10k limit (5k from 2009 and 5k from 2010).

[bilodeau1]

Yes this is an often overlooked benefit of the TFSA. As you grow exponentially, you can take profits. And then have that value added to your contribution room for the next year.

"You can withdraw funds available in your TFSA at any time for any purpose,— and the full amount of withdrawals can be put back into your TFSA in future years. "
http://www.tfsa.gc.ca/tfsapamphlet-eng.html

Yes, that is the beauty of TFSA. Don't forget that you already have a 10k limit (5k from 2009 and 5k from 2010).

[tkyoshi]

Yes this is an often overlooked benefit of the TFSA. As you grow exponentially, you can take profits. And then have that value added to your contribution room for the next year.

"You can withdraw funds available in your TFSA at any time for any purpose,— and the full amount of withdrawals can be put back into your TFSA in future years. "
http://www.tfsa.gc.ca/tfsapamphlet-eng.html

Yup, so in the first year if you had $5K, made $5K profit (so $10K Total), then you withdrew all of it.

For 2010: You can put back in up to $15K ($10K from W/D which is your Initial and Profit + $5K for 2010)